|NSW DISPUTE RESOLUTION SERVICE (NSWDRS)|
|Catchwords||Legal costs – costs of medical assessment – minor injuries – wholly or mostly at fault – DRS application costs – physical medical dispute application – psychological medical dispute application – reasonable and necessary costs|
Motor Accident Injuries Act 2017 (NSW) ss 1.3(2)(g), 7.13(4), 7.17, 7.20, 8.3, 8.3(1)(c), 8.10(3), 8.10(4), Division 7.6, Schedule 2 clause 1(aa) & 2(e)|
Motor Accident Injuries Regulation 2017 cl 10(d), Schedule 1 clause 2(3
Motor Accident Guidelines 7.181, 7.186
AFJ – Claimant
AAI Limited trading as GIO – Insurer
|Disclaimer||This decision has been edited to remove all Unique Personal Identification including the name of the Claimant.|
Merit Review Certificate
Reasons for decision
Issued in accordance with section 7.13(4) of the Motor Accident Injuries Act 2017
1. AFJ was injured in a motor vehicle accident on 30 April 2018.
2. AAI Limited trading as GIO (“the Insurer”) accepted AFJ’s claim under the Motor Accidents Injuries Act 2017 (“the Act”).
3. On 23 November 2018, the Insurer issued a ‘GIO Liability Notice – Benefits after 26 weeks’ to AFJ denying liability for statutory benefits after 26 weeks of his claim on the basis that his injuries had been determined as ‘minor injuries’ and he had been determined as ‘wholly or mostly at fault’ under the Act.
4. AFJ disputed this decision and lodged an application with the Dispute Resolution Service (“DRS”) on 18 January 2019 for a medical assessment in relation to the ‘minor injury’ determination.
5. On 5 February 2019, the Insurer issued an amended ‘GIO Liability Notice – Benefits after 26 weeks’ to AFJ which determined that his injuries fell outside the definition of ‘minor injury’.
6. AFJ accordingly withdrew his application for medical assessment with the DRS, on 6 February 2019.
7. AFJ’s legal representatives, Stephen Young Lawyers, subsequently issued two invoices to the Insurer claiming recovery of legal costs of the medical assessment in the amount of $1,796.26 for ‘DRS Application – Medical Dispute (Physical)’ and $1,796.26 for ‘DRS Application – Medical Dispute (Psychological)’.
8. The Insurer did not make payment of the invoices and verbally declined to make payment to AFJ’s legal representatives on 6 June 2019. This is the ‘reviewable decision’ for the purposes of the Act. The issue in dispute is whether AFJ is entitled to recover from the Insurer the legal costs incurred pursuant to section 8.10 of the Act, and if so, the quantum of those costs.
9. It does not appear that AFJ sought an internal review by the Insurer of the reviewable decision and I note that clause 10(d) of the Regulations excludes disputes arising under section 8.10 of the Act from the requirement of internal review.
10. AFJ lodged his application for merit review with the DRS on 6 June 2019. The application was accepted and falls within the jurisdiction of the DRS as a merit review matter under Schedule 2(1)(aa) of the Act.
11. I have considered the documents provided in the application and the reply and any further information provided by the parties. I have also considered AFJ’s application for medical assessment dated 18 January 2018.
12. In conducting my review, I have considered the following legislation and guidelines:
- Motor Accident Injuries Act 2017 (NSW) (“the Act”)
- Motor Accident Guidelines 2017 (as amended on 15 January 2019) (“the Guidelines”)
- Motor Accident Injuries Amendment Regulation 2017 (NSW) (“the Regulations”)
13. AFJ submits:
b. He received verbal communication from the Insurer on 6 June 2019 that the two invoices will not be paid unless there is an order from DRS.
c. According to clause 2(3) of Schedule 1 of the Regulations, the Insurer is liable to pay the costs of legal services to AFJ.
d. The assistance of DRS is requested to help AFJ chase payment of the two invoices from the Insurer.
14. The Insurer submits:
b. AFJ’s solicitors are claiming $1,796.26 (inclusive of GST) for the completion and lodgment of AFJ’s physical medical dispute application; and $1,796.26 (inclusive of GST) for the completion and lodgment of AFJ’s psychological medical dispute application.
c. The Insurer notes that by operation of section 8.10(3) of the Act, claimants are entitled to recover legal costs in relation to a claim for statutory benefits if such costs are permitted by the Regulations or the DRS.
d. The Insurer is unable to pay any costs for legal services because there is no mechanism permitting such costs unless allowed by a claims assessor or a court. Pursuant to section 8.10(4) the DRS can permit payment of legal costs incurred by a claimant but only if satisfied that:
(b) exceptional circumstances exist that justify payment of legal costs incurred by the claimant.
f. It is not submitted that the provisions in the Regulations in relation to maximum costs for legal services have no application at all. Such costs may be allowed where a claim proceeds to the assessment of damages under Division 7.6.
g. The Insurer outlines its understanding of how medical disputes proceed in the new scheme, based on the intention of the scheme and submits that claimants may retain lawyers for the purposes of providing submission to the proper officer that the Medical Assessment was incorrect in a material respect. It is submitted that it is only at this point that the Insurer is liable to pay costs for legal services for the subject medical dispute by operation of Schedule 1 of the Regulations.
h. The Insurer submits that AFJ does not have exceptional circumstances to be allowed costs in connection with the dispute regarding minor injury. For AFJ to engage lawyers to complete the application form for the medical dispute is not reasonable and necessary as it is not necessary for solicitors to make legal submissions to a medical assessor.
i. On review of AFJ’s application for medical assessment, AFJ’s legal representatives have made no detailed submissions in support of their applications apart from submitting that AFJ’s injuries are non-minor and that the Insurer did not have sufficient medical evidence to base their determinations on.
j. The Insurer is not satisfied on the information before it that the information submitted supports that there are exceptional circumstances to justify payment of legal costs and submits that legal costs are not recoverable for this application.
15. The issue in dispute before me is AFJ’s entitlement to legal costs relating to the application for medical assessment of the ‘minor injury’ dispute.
16. Section 8.3 of the Act provides for the fixing of maximum costs recoverable by Australian legal practitioners. Section 8.10(1) provides that a claimant for statutory benefits is (subject to that section) entitled to recover from the insurer ‘reasonable and necessary’ costs in connection with the claim. This is qualified by subsections (2), (3) and (4) which provide that the recovery of costs is allowed if payment is permitted by the Regulations or the DRS.
17. The Insurer makes a number of submissions in relation to the payment of legal costs in this matter. The Insurer submits initially that it is unable to pay any costs for legal services in connection with medical assessments because there is no mechanism permitting such costs unless allowed by a claims assessor or a court.
18. I do not agree with these submissions of the Insurer. I note that costs for medical assessments are specifically permitted by the Regulations at Schedule 1, Part 1(2)(1) of the Regulations, which provides:
19. In providing a maximum amount recoverable the Regulations, in my view, specifically permit payment of reasonable and necessary legal costs incurred “in connection with a medical assessment”.
20. The Insurer submits that the use of the words “claims assessor or court” supports that the intention of the scheme is that claimants are not legally represented in applications for medical assessment matters unless the matter proceeds to a proper officer for review of a medical assessment or assessment of damages under Division 7.6 of the Act. I note however that the costs recoverable in the case of these latter forms of dispute are provided for separately under the Regulations.
21. Further I note that section 8.3(1)(c) of the Act provides that the Regulations may make provision with respect to declaring that no costs are payable for any such legal services or other matters of a kind specified in the Regulations. I consider, that if it was the intention of the scheme that costs are not recoverable in relation to medical assessment matters, such matters could have been specified in the Regulations as such.
22. For the above reasons, I do not agree with the submissions of the Insurer that there is no mechanism allowing insurers to pay the costs of medical assessment matters and that this is in line with the perceived intention of the scheme that lawyers are not retained in medical assessment matters.
23. Accordingly, I do not consider that AFJ has the onus of establishing that exceptional circumstances exist to allow costs in this matter, as submitted by the Insurer, because I am not required to rely on sub-section 8.10(4)(b) of the Act as I am satisfied that the Regulations permit the recovery of reasonable and necessary costs of medical assessment matters, at Schedule 1, Part 1, clause 2 of the Regulations.
24. AFJ submits that the Insurer advised that it was unable to pay costs without an order from DRS, which appears to have been advised on the same basis as the submissions referred to above.
25. I note that the DRS has jurisdiction to determine disputes arising in relation to costs as merit review matters under Schedule 2, clause 1(aa), which outlines the dispute as follows:
26. Accordingly, in matters where there is a dispute between parties about whether the costs and expenses incurred are reasonable and necessary, for the purpose of recovery of such costs, the DRS has jurisdiction to determine such disputes and make determinations or “orders”.
27. Jurisdiction is therefore conferred to the DRS when there is a dispute referred for determination. The above provision does not, nor does any other provision under the Act, work to prevent an insurer from agreeing to pay costs in matters in which it accepts it is liable to pay costs. Similarly, there is no provision in the Act or the Regulations which states that costs cannot be agreed to or paid without a costs order.
28. As noted above, section 8.3(3) provides that costs are recoverable if permitted by the Regulations or the DRS. I am satisfied on the reasons outlined above, that the Regulations permit costs in medical assessment matters. In this case, an “order” or determination from the DRS is not necessary for an insurer to agree to pay the reasonable and necessary costs of a claimant.
29. It is also important to note that Insurers refusing to consider payment of legal costs on the grounds as submitted in this case, resulting in further disputation, falls contrary to the objects of the Act particularly that at section 1.3(2)(g):
Reasonable and Necessary Costs
30. Having established that the costs of medical assessments are recoverable, I will proceed to assess AFJ’s reasonable and necessary legal costs in respect of the medical assessment. Sub-clause
31. AFJ, through his legal representatives, lodged an application for medical assessment with the DRS on 18 January 2019 in respect of the Insurer’s decision, dated 23 November 2018, that he had a ‘minor injury’. Subsequent to lodgment of the application, the Insurer issued an “amended” ‘GIO Liability Notice – Benefits after 26 weeks’ on 5 February 2019, revoking its decision in relation to minor injury and determining that AFJ’s injuries fell outside the definition of ‘minor injury’.
32. AFJ withdrew his application for medical assessment with the DRS, on 6 February 2019.
33. AFJ’s legal representatives, Stephen Young Lawyers subsequently issued two invoices to the Insurer claiming recovery of legal costs in the amount of $1,796.26 for ‘DRS Application – Medical Dispute (Physical)’ and $1,796.26 for ‘DRS Application – Medical Dispute (Psychological)’. As noted above, the Insurer has declined to make payment of the invoices.
34. It is open to me to permit any amount of costs up to the maximum amount, including nil. In this case, I consider it appropriate to allow some costs for the preparation and lodgment of the application for medical assessment given that the Insurer appears to have conceded its decision was wrong after AFJ was put to the cost of lodging an application.
35. However, I do not consider I am able to allow the total cost of the two invoices, in the sum of $3,592.52, as it exceeds the maximum costs of 16 monetary units ($1,633.00) provided in the Regulations.
36. It appears that AFJ’s legal representatives have issued the two invoices on the basis that AFJ has both physical and psychological injuries; although only one application for medical assessment was lodged, listing a number of different physical injuries and a psychological injury, and attaching one set of submissions.
37. Regardless of whether two separate applications are lodged or not, I note that section 7.20 of the Act provides that a “medical dispute” can be referred to the DRS for a “medical assessment”. A definition for “medical assessment” is provided at section 7.17 as follows:
38. Schedule 2, clause 2(e) of the Act declares a dispute about whether an injury is a ‘minor injury’ as a “medical assessment matter”.
39. It is important to note that the maximum costs provided at Schedule 1, Part 1, clause 2 of the Regulations relates to costs in connection with a “medical assessment”, which is defined to be an assessment of a “medical assessment matter”. The maximum of 16 monetary units therefore does not relate to injuries or types of injuries, which appears to be the basis of the two separate invoices issued in this matter, but rather the “medical dispute” regarding ‘minor injury’ which has been referred to the DRS for a “medical assessment”.
40. In this matter, given that there was one medical dispute about minor injury, that was referred to the DRS, I consider the maximum of 16 monetary units applies in respect to AFJ’s application for medical assessment dated 18 January 2019.
41. As noted above, it is open to me to permit any amount of costs up to the maximum amount.
42. On review of AFJ’s application for medical assessment dated 18 January 2019, I note that AFJ’s legal representatives make approximately half a page of submissions on his behalf. The submissions provide a brief history of the dispute, make submissions in relation to attainment and payment of medical documents and state:
43. This is the extent of the submissions directly related to the minor injury dispute. I note that no submissions specifically in relation to the psychological injury are made.
44. The application includes a number of attachments, namely a copy of the Application for Personal Injury Benefits form, Certificate of Capacity/Certificate of Fitness dated 8 May 2019 and ‘liability notice’ letters from the Insurer dated 10 September 2018 and 23 November 2018. The application lists a number of further documents AFJ’s legal representatives state should be provided by the Insurer.
45. Further to the submission that the Insurer did not rely on “sufficient medical evidence”, AFJ’s legal representatives do not make submissions in relation to how the documents attached are relevant to the application and support that AFJ does not have a ‘minor injury’. The Insurer submits that AFJ’s legal representatives have not made detailed submissions in support of the application.
46. AFJ’s legal representatives do not provide a schedule itemising the costs incurred in respect of the application for medical assessment or make submissions about what the costs claimed in the invoices relate to.
47. When considering what costs, of the costs claimed by AFJ’s legal representatives, are reasonable and necessary however, I have had particular regard to the Insurer revoking its decision in relation to minor injury subsequent to the application for medical assessment. If the Insurer fell into error in its original decision or failed to properly investigate AFJ’s injuries before making the decision, I do not consider AFJ should bear the costs of such an error.
48. Applying my discretion and experience, having had regard to the application for medical assessment prepared by AFJ’s legal representatives and to the level of submissions/reasons provided and overall consideration put into the application, I consider it appropriate to allow legal costs of $960.00.
49. Accordingly, I allow costs in the amount of $1,056.00 (inclusive of GST) in respect to the application for medical assessment dated 18 January 2019.
50. The Insurer’s reviewable decision made on 6 June 2019 is set aside and the following decision is made in substitution of the reviewable decision:
51. Effective date: This determination takes effect on 19 July 2019.
Merit Reviewer and Claims Assessor